chpater 8

Disposable Income

the money you have left to spend or save after taxes and other deductions

Financial Plan

set of goals for spending, saving, and investing the money you receive

5 ways financial planning helps

determine and evaluate you choices

prioritize your choices so your money doesn't run out

avoid careless and wasteful spending

organize your financial resources

avoid money worries by planning your saving, spending, and borrowing to live within your income

Budget

a spending and saving plan based on expected income + expenses

Fixed expenses

don't change month-to-month

variable expenses

costs that vary depending on choices

net worth statement

net worth based on assets and liabilities

assests

items of value that a person owns

Liabilities

money/debts owed to others

net worth

The difference between your liabilities and your assets

personal property inventory

a list of the valuable items you own, along with their purchase prices and approximate current values

tax records

receipts verifying income and expenses listed on each return

other records

dditional records including car titles, insurance policies, birth and marriage certificates, and passports

contract

legally enforceable agreement between two or more people

agreement

When a valid offer is made and accepted

Counteroffer

a new offer because it changes the original offer

consideration

Something of value is exchanged for something else of value

contractual capacity

The legal ability of the parties to enter a contract

legality

to be legally enforceable

Co-signer

Someone who promises to pay the debt of another person

warranties

is a statement assuring the quality and performance of a product or service